The search for the digital economy ‘Holy Grail’

Digital transformation could add €1.25trn (£1trn) to Europe’s industrial value creation by 2025, according to a March 2015 report by consulting firm Roland Berger and the Federation of German Industries (BDI). But it could also diminish value creation by €605bn (£475bn) if European organisations are not able to turn the digital transformation to their advantage, the report says.

Europe’s service sector is growing and has the ability to transform the EU economy in the same way it has in the U.S. New technology can help strengthen these industries and support the delivery of new kinds of value-add services. For the first time, companies have the tools to free up people to focus on customer service and engagement, instead of spending time entering data into systems that are difficult to use. This combination is driving global change through business model innovation.

Key to success: Engaging people

The services industry presents the most complex and challenging business models. The problem many of these organisations face is how to deliver great services efficiently and effectively every time. A typical service business model is focused on increasing customer satisfaction, which leads to loyalty and profitability. The increase in profitability is directly related to customer retention, so keeping customers satisfied is essential for growth. Those companies that focus on boosting customer satisfaction — as well as emphasising the success of their employees — tend to grow faster than other companies.

Service businesses are built around people, not just assets, and those people are increasingly becoming a digitally native workforce. Customer success and employee success feed one another. They are so interconnected that going virtual and re-imagining the way your business operates is becoming more and more paramount. The bottom line: Traditional solutions and business models fail to engage either customers or employees.

Companies such as Amazon and more recently Uber show how quickly industries can change through technology advancements and business model innovation.

One of the key technologies for delivering better experiences for customers and improving employee performance is advanced data analysis. Advanced analytics is at the core of identifying patterns and predicting behavior. Better insight and the ability to anticipate customer needs will lead to the creation of new types of product and service offerings.

Re-imagining services

In 2014, Accenture produced a technology vision paper that gives a number of examples of business model transformation:

Customer experience

Tesco, Neiman Marcus, and Staples are continually experimenting with new ways to deliver unique and meaningful consumer experiences. Tesco and Staples are transforming their in-store technology and service offerings to better align with consumer lifestyles. Tesco is rolling out face-scanning digital signage at all 450 of its UK petrol stations to tailor engaging and on-screen content to the audience of five million plus adults who pass through its stations each week. Staples is piloting stores with less merchandise, more kiosks (with free next-day delivery), and meeting spaces for busy small-business owners. Neiman Marcus has piloted digital-physical solutions that provide both sales associates and customers with actionable intelligence — in the form of store events, product arrivals, and even personal touches such as the knowledge of when a favourite sales associate is working.

Get on the Shelf

Walmart Labs, the digital technology division of the world’s largest retailer, is embracing the power of the crowd to determine which items the company should stock in its stores and on its website. Its contest 'Get on the Shelf' was heavily promoted on Facebook, Google+, and Twitter, where the company offered a way to democratise the job of the store buyer and bring shelf selections in line with shoppers’ expectations. It provided Walmart with a clear view of the demand for products not currently on its shelves.

These both demonstrate the impact technology can have on the delivery of enhanced customer experiences.

This idea of business model innovation, of delivering a completely new way of doing things, has held the attention of business leaders for several years but has never been more urgent than it is today. As more and more product companies strive to become service companies, and service companies look to create new value chains, developing a perpetual business model is the Holy Grail. New technologies and a new digital mindset make this new kind of service focus not only possible, but essential. And they put customer service at the front of the queue when it comes to creating a successful business.